E-Commerce

EBay's Adventures in Brick and Mortar

Amazon.com (AMZN), Gilt Groupe, and other online retailers are blitzing consumers with early promotions this holiday season in the hope that shoppers will stay glued to their personal computers or smartphones and out of department stores and boutiques. EBay (EBAY) is taking a different tack: It will open a pop-up store in London to catch consumers while they’re out on the streets—and get them to shop online.

The shop on Dean Street in London’s West End will be opened from Dec. 1 to Dec. 5. Products will be displayed with so-called QR (as in quick response) codes, souped up versions of the familiar bar code, that can be embedded with a URL address, data, or text. When scanned by smartphones, these codes will take a customer to the payments section of the EBay site.

At two other pop-up stores in New York and San Francisco, EBay is setting up Give-A-Toy storefronts in a partnership with the charity Marine Toys for Tots Foundation. Consumers can purchase and donate toys by scanning a product code displayed on a screen with their digital devices. There will be cafés set up alongside these temporary storefronts with food trucks and free Wi-Fi. Visitors can take a seat and shop on their mobile phones. Passersby will be handed a gift guide with popular holiday items—Apple (AAPL) iPhones, Call of Duty, Wüsthof knives—with QR codes that direct users to the mobile EBay holiday website to browse. “We want to be present during those moments when that inspiration hits consumers, when they see the product that they want, and they want to get it then and there,” says Richelle Parham, chief marketing officer for North America at EBay, the world’s biggest online auction site. Future pop-up stores are in the works, a company spokesperson says.

In an industry known for its fads, this is called multichannel retailing. EBay Chief Executive Officer John Donahoe and his team want to find ways to tap the expanding market for mobile commerce, which the company expects to generate $5 billion this year. In 2010, EBay bought the barcode-scanning app RedLaser from Occipital, a software maker based in Boulder, Colo., and has integrated the technology into its own iPhone and Android (GOOG) apps, which have been downloaded by 58 million users. EBay also sees mobile purchases boosting revenue at PayPal, its online-payment unit and, with 103 million active registered accounts, the fastest-growing part of the company. Third-quarter revenue for the unit jumped 32 percent, to $1.1 billion.

EBay’s mobile retailing foray faces big competition from Amazon, which is promoting a mobile application called Price Check that lets consumers use their iPhones to search for items via a barcode scan or by voice and text search. While trolling stores, shoppers can compare prices and read reviews on products available from Amazon or the company’s retail partners. Amazon hopes this will encourage consumers to link to the payments page and make a transaction.

Despite the tough economy, Cambridge (Mass.)-based Forrester Research (FORR) forecasts holiday online retail sales will rise 15 percent, to $59.5 billion, this year vs. 2010, thanks in part to fresh mobile-retail dollars. “Web retailers are better-positioned than [brick-and-mortar] store retailers. They, in many cases, can have better offers because their economics are more favorable,” says Sucharita Mulpuru, an analyst with Forrester.

The bottom line: EBay will use holiday pop-up stores in London, New York, and San Francisco to lure visitors onto their mobile phones to shop.